Allied Parts was organized on May 1, 2013, and made its first purchase of merchandise on May 3. The purchase was for 1, 100 units at a price of $10 per unit

Allied Parts was organized on May 1, 2013, and made its first purchase of merchandise on May 3. The
purchase was for 1, 100 units at a price of $10 per unit. On May 5, Allied Parts sold 660 of the units for
$14 per unit to Baker Co. Terms of the sale were 2/10, n/60.
a. On May 7, Baker returns 231 units because they did not fit the customer's needs. Allied Parts restores
the units to its inventory.
b. On May 8, Baker discovers that 55 units are damaged but are still of some use and, therefore. keeps
the units. Allied Parts sends Baker a credit memorandum for S330 to compensate for the damage.
c. On May 15, Baker discovers that 66 units are the wrong color. Baker keeps 40 of these units because
Allied Parts sends a $86 credit memorandul11l to compensate. Baker returns the remaining 26 units to
Allied Parts. Allied Parts restores Ille 26 returned units to its inventory.
Prepare the appropriate journal entries for Baker Co. to record the May 5 purchase and each of tile three
separate transactions a through c. Baker is a retailer that uses a perpetual inventory system and
purchases these units for resale.